Peduto, Fitzgerald call for ouster of August Wilson Center conservator

April 22, 2014 11:43 PM

Rebecca Droke/Post-Gazette

The August Wilson Center.

John Heller / Post-Gazette

Pittsburgh Mayor Bill Peduto

Judith K. Fitzgerald

By Mark Belko / Pittsburgh Post-Gazette

The battle over the debt-plagued August Wilson Center for African American Culture has taken another turn, with the region's two top political leaders calling for the ouster of the conservator in charge of selling the property.

Pittsburgh Mayor Bill Peduto and Allegheny County Executive Rich Fitzgerald said Tuesday they have lost confidence in Judith Fitzgerald's handling of the matter as she pursues the highest bid -- $9.5 million -- for the Downtown venue over their opposition.

"It is our opinion that receiver Fitzgerald does not maintain as her highest priority the public interest of preserving the mission of the center as a public asset," they wrote in a letter to Common Pleas Judge Lawrence O'Toole of Orphans' Court, who is overseeing the case.

"We are concerned that receiver Fitzgerald has favored a commercial approach, has not presented any significant plan to preserve the mission of the center, and her process has been devoid of any meaningful interaction with the local African-American community."

In an interview, Mr. Peduto said that Ms. Fitzgerald, a former bankruptcy judge, has been a roadblock in his and the county executive's efforts to fashion a compromise that would keep the center's mission intact while "trying to make the creditors as whole as possible."

"At this point, the only way that we feel that that will ever happen or that we'll have an August Wilson Center that promotes the culture, history, art of the African-American community and all communities is to have Judge Fitzgerald removed from the process," he said.

The politicians' call for Ms. Fitzgerald's ouster comes a day after the Pittsburgh Foundation, the Heinz Endowments, and the Richard King Mellon Foundation withdrew their $4 million bid to purchase the center, saying it was apparent to them that Ms. Fitzgerald favored the highest bidder.

In an interim report filed last week, Ms. Fitzgerald said that unless Judge O'Toole objected, she intended to pursue the $9.5 million offer advanced by an unnamed local developer who wants to put a hotel on top of the $40 million building, which opened in 2009.

She said the bid not only would pay off nearly all of the center's debts, including a $7 million delinquent mortgage held by Dollar Bank, but would help to preserve its mission by removing facility costs and debt obligations.

The developer is offering the center free gallery, storage, and office space as well as use of the theater for at least 120 days a year at a nominal fee. It also would enter into a long-term licensing agreement with the center.

Although their bid was lower, the foundations planned to create an ongoing revenue stream to sustain the center, the mayor said, and set up a new structure for managing the facility, one overseen by a board made up of representatives from the African-American community.

"By doing those things, you'll have a center that exists for many more years, not just a hotel that will look at it always as a cost loser and a secondary function," Mr. Peduto said.

Ms. Fitzgerald has said that she is required under state law to provide the best recovery for creditors while noting that a secondary consideration in this case is preserving the center's mission.

However, the mayor and Mr. Fitzgerald, no relation to the conservator, argued that the August Wilson Center is more than a piece of private property -- it is a public asset that deserves to be preserved. They said the foundations and taxpayers have sunk more than $30 million into building and operating the center.

"The last thing I'm going to see is this city be tarnished with losing a cultural gem on an international scale just because five banks want to get 100 percent of their money back," Mr. Peduto said.

Ms. Fitzgerald asked for permission to put the building up for sale after her efforts to save the center failed. She was appointed by Judge O'Toole after the center defaulted on its $7 million mortgage and Dollar Bank moved to foreclose.

She could not be reached for comment Tuesday.

The $9.5 million bid was the highest of four for the building. In addition to the foundations' $4 million offer, two unnamed commercial enterprises bid $4.5 million and $3.25 million, respectively, for it.

Even if Ms. Fitzgerald were to accept one of the lower bids, Dollar Bank could usurp that by bidding the amount it is owed and move ahead with a foreclosure.

But Mr. Peduto, a Dollar customer, said he didn't see how that would benefit the bank or other creditors.

"I mean how is that in the long-term interests of any of the creditors to be able to say we just had to get our money and for an entire region to lose what is recognized as one of the great playwrights of the 20th century, his name is on that building, and we're going to throw it away so the banks can get 100 percent of their money back?" he asked.

However, the $9.5 million bid was endorsed by Aaron Walton, former August Wilson Center board chairman, who said in a Pittsburgh Urban Media article that it would pay off most of what the center owed; preserve its name and mission "without the burden of ongoing debt"; and create at least 100 jobs through the hotel.

The offer, he added, is "more closely aligned with the best interests of all stakeholders, especially those of the African-American community."

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